PRESENTATION INVESTOR January 2018
DISCLAIMER Certain statements contained in this document are forward-looking statements (including objectives and trends), which address our vision of the financial condition, results of operations, strategy, expected future business and financial performance of Lagardère SCA. These data do not represent forecasts regarding Lagardère SCA’ results or any other performance indicator, but rather trends or targets, as the case may be. When used in this document, words such as “anticipate”, “believe”, “estimate”, “expect”, “may”, “intend”, “predict”, “hope”, “can”, “will”, “should”, “is designed to”, “with the intent”, “potential”, “plan” and other words of similar import are intended to identify forward-looking statements. Such statements include, without limitation, projections for improvements in process and operations, revenues and operating margin growth, cash flow, performance, new products and services, current and future markets for products and services and other trend projections as well as new business opportunities. Although Lagardère SCA believes that the expectation reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including without limitations: • general economic conditions; • legal, regulatory, financial and governmental risks related to the businesses; • certain risks related to the media industry (including, without limitation, technological risks); • the cyclical nature of some of the businesses . Please refer to the most recent Reference Document (Document de référence) filed by Lagardère SCA with the French Autorité des marchés financiers for additional information in relation to such factors, risks and uncertainties. No representation or warranty, express or implied, is made as to, and no reliance should be placed upon, the fairness, accuracy, completeness or correctness of such forward-looking statements and Lagardère SCA, as well as its affiliates, directors, advisors, employees and representatives accept no responsibility in this respect. Accordingly, we caution you against relying on forward-looking statements. The forward-looking statements abovementioned are made as of the date of this document and neither Lagardère SCA nor any of its subsidiaries undertake any obligation to update or review such forward-looking statements whether as a result of new information, future events or otherwise. Consequently neither Lagardère SCA nor any of its subsidiaries are liable for any consequences that could result from the use of any of the above statements. 2
TABLE OF CONTENT GROUP PROFILE slide 4 GROUP STRATEGY slide 8 slide 15 slide 19 slide 23 slide 26 GROUP PERFORMANCE slide 29 Appendix slide 40 3
GROUP PROFILE
A FAST-CHANGING GLOBAL ENVIRONMENT SHAPED BY 4 KEY GROWTH DRIVERS International offering adjusted to local specificities: shops, sport events, medias and entertainment Glocalisation Nomadism, globalisation of travel: increase in PAX Mobility Creation of a worldwide middle class, happy to travel Consommation Consumption and experience worldwide cultural products Digital is a growth driver for Digitalisation content consumption (multi- binge-viewing) 5
GROUP LONG-TERM GROWTH BASED ON WORLDWIDE INCLINATION TOWARDS EXPERIENCE: TRAVEL AND CULTURE EXPERIENCES Growth in air passengers travel [in %, 2015-2040] CAGR: 4.9 % Discretionary categories are showing the fastest growth North Europe Middle America +3.7% East and +2.8% Asia +7.7% Asia- Pacific +6.2% Africa Latin +4.2% America +4.6% Source: Lagardère, ACI, 2016 World Airport Traffic Forecasts. Assemblée Générale du 4 mai 2017 Travel is key for millenials & BRICs 6 Source: Airbnb travel report 2016.
A DIVERSIFIED GROUP WITH LEADING BRANDS AND MARKET POSITIONS 2016 revenue breakdown by division 2016 revenue breakdown by region • No. 3 worldwide (Trade) • No. 3 worldwide in Travel 50% • A multi-segment publisher Retail 31% • Robust expertise in three A major player in the digital • business lines sector Latin America, Africa, Middle Asia- East Pacific 7% 2% 9% • Leader in football in Africa, Asia and Europe • No. 1 in TV Production in France 12% US and France 30% Leader in sponsorship and • Canada media rights globally • One of France's leading 20% Internet and mobile media • Leader in golf globally groups Europe • Major player in Press and Radio in France 39% 7
STRATEGY GROUP
OUR STRATEGY IS FOCUSED ON LONG-TERM VALUE CREATION 1 Successful business portfolio overhaul focused on growth 2 Strategic plan focused on profitability and cash generation 3 A well-balanced, prudent financial strategy 9
1 SUCCESSFUL OVERHAUL OF OUR PORTFOLIO Revenue by division Major Major disposals acquisitions Distribution In Hungary 2017 7% Distribution in Belgium and Spain 2016 12% 31% 2016 Distribution in Switzerland 2015 and the US 10 French magazines 2014 50% 7.4% of 2013 20% of Lagardère 25% of Active Retail Broadcast Books 5% Le Monde Interactif 2011 8% EADS * 36% International magazines Press 2003 16% French regional dailies, Virgin 2007 Megastore 7.5% of 2006 Distribution in Germany Lagardère Media 2005 Distribution Services 35% 10 *Proportionate consolidation of EADS at 15.04%.
A BALANCED PORTFOLIO SET UP FOR GROWTH AND SUSTAINABLE 1 CASH GENERATION Growth engine Cash generation today Low High 11
2 INCREASING PROFITABILITY IS A PRIORITY Consolidated recurring Main factors/measures EBIT (€m) and operating margin (%) Cost control discipline. Office and warehouse space optimized in France, in the UK and in the US. 5.3% Cost synergies resulting from acquisitions. 395 Restructuring and sale of the Distribution business. 4.6% Improved product mix and purchase conditions. Synergies resulting from acquisitions. 339 Restructuring of declining activities. Shift in business portfolio to focus on TV Production. Revenue diversification. Restructuring of the premium media rights business 2012 2016 in Europe. Portfolio rationalization. Revenue stable over the period Operating efficiency drive. 12
SHARP RISE IN CASH FLOW GENERATION FUELLED BY HIGH LEVEL 2 OF INVESTMENTS 557 557 84 447 403 63 32 253 24 45% investment spending + 25 % 68 59 +11% 194 161 161 168 30%: ordinary dividend 234 202 193 25%: reduction in debt and 136 other* (16) (18) (34) 2014 2015 2016 Allocation of 2016 operating cash flow Lagardère Publishing Lagardère Travel Retail Lagardère Active Lagardère Sports and Entertainment Other *Includes mainly translation adjustments and payments of taxes and interest. 13
3 A WELL BALANCED, PRUDENT FINANCIAL STRATEGY A tight rein on debt which allows …and providing long-term viability for a €500 million investment capacity an attractive dividend payout policy Historical dividends (€/share) 3x €500m Headroom €1,551m + €162m 9.0 €1,389m 6.0 4.9%*** 2.4x ** 1.3 1.3 1.3 1.3 1.3 2.2x 2,4x* 2012 2013 2014 2015 2016 Ordinary dividend Dividende ordinaire Extra dividend Dividende extraordinaire 31/12/2015 31/12/2016 Ordinary dividend stable over the long term (€ per share). Leverage Ratio Large payouts to shareholders following the one-off sale Net debt/ Recurring EBITDA* of non-strategic shareholdings. Attractive ordinary dividend yield given the current climate *Defined as the sum of (i) recurring EBIT of fully consolidated companies, of low interest rates. (ii) depreciation and amortisation of property, plant and equipment and intangible assets and (iii) dividends received from equity-accounted companies. **On a proforma basis (as per credit facility covenant), including 12 months ***Yield based on the closing share price of €26.73 at 02 January 2018. of Paradies’ recurring EBITDA. On a reported basis, the ratio is 2.6x. 14
SUCCESSFUL PORTFOLIO OF PUBLISHING BUSINESSES WITH SOLID LEADING POSITIONS IN CORE MARKETS 2016 revenue by geographic area 2016 revenue by activity Education Other Other 17% 15% 17% France 28% Illustrated Spain Partworks Books 6% 11% 13% US & General UK & Canada Literature Australia 27% 44% 22% Top 3 Consumer book publishers worldwide Ranking in core markets * Based on 2015 pro-forma turnover (€m) (Consumer: Trade & Education including Higher Education) 4,980 3,715 2,066 #1 #2 #3 #4 #2 * Consumer (trading and education). Based on 2015 average exchange rates. Revenues from STM, professional markets and other activities than book publishing have been excluded when it could be isolated. 16 Sources: Annual reports, Internal estimates, lpsos, Nielsen Bookscan.
GROWTH FUELLED BY ACQUISITION AND INTERNATIONAL DEVELOPMENT Revenue evolution (€m) and cash flow from operations Growth fuelled by acquisitions (2003-2016) before changes in working capital (2003-2016) 2016 2015 2,264 2014 Revenue Cash flow from operations before 2013 changes in working capital 2011 2009 A. 959 2008 2007 2006 234 83 2004 2003 2016 2003 17
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